MovieBeam closes. Bad news for Vudu, AppleTV?

MovieBeam, an early attempt at creating a consumer facing set-top box and accompanying movie service, has closed its doors after fours years in business.

Originally founded by The Walt Disney Company and later sold to U.S. video rental chain Movie Gallery, MovieBeam was designed to bypass Cable and Satelite providers by beaming movies wireless into the home. The set-top box came with dozens of movies already stored and ready for rental (at $5 a pop), with forty new titles refreshed each month. In total the device could store around a hundred movies at any one time.

Meaghan Repko, a spokeswoman for Movie Gallery, told Reuters that MovieBeam had 30 employees and 1,800 subscribers when it shut down, and that subscribers who joined the service in March or later were being refunded the cost of the set-top box.

On the face of it, this appears to be bad news for new entrants in the set-top box market attempting to sell direct to consumers. Think Vudu and the AppleTV as two recent examples or going back a bit further, TiVo.

TVPredictions’ Phillip Swann says MovieBeam’s failure shows that U.S. consumers don’t have the stomach for another set-top box competing for cabinet space.

Americans have set-top fatigue — and they are tired of stacking set-top upon set-top next to their televisions. In many homes, they already have a cable/satellite box, a DVD player, a VCR, a video game player and perhaps even an A/V receiver. Enough is enough.

This is why MovieBeam failed. It’s why TiVo is struggling to generate subscribers outside of cable/satellite partnerships. And it could be a reason why the high-def DVD players are lagging in sales.

For a new set-top to succeed, it has to offer a service so powerful that Americans will ignore their set-top fatigue and give it a try. MovieBeam clearly was not that service.

Of course, a lack of compelling content may have also been MovieBeam’s downfall, along with high infrastructure costs, presuming they had to support their own wireless network. And then there is the cost of the set-top box itself. As we’ve said previously with regard to Vudu, it’s a big ask for consumers to pay out for new hardware just so they can enter the store and begin renting movies.

last100 is edited by Steve O'Hear. Aside from founding last100, Steve is co-founder and CEO of Beepl and a freelance journalist who has written for numerous publications, including TechCrunch, The Guardian, ZDNet, ReadWriteWeb and Macworld, and also wrote and directed the Silicon Valley documentary, In Search of the Valley. See his full profile and disclosure of his industry affiliations.